U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[x]            QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended: March 31, 1998

[ ]           TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

         For the transition period from ___________ to ___________

                         Commission file number 0-17232

                           CAPITAL RESERVE CORPORATION
        (Exact name of small business issuer as specified in its charter)

           COLORADO                                                84-0888594
(State or other jurisdiction of                                (IRS Employer
 incorporation or organization)                              Identification No.)

           6732 WEST COAL MINE AVENUE, #504, LITTLETON, COLORADO 80128
                    (Address of principal executive offices)

                                 (303) 794-3155
                           (Issuer's telephone number)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                          if changed since last report)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements  for the past 90 days.  Yes ___ No
_X_

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the last practicable date:

           546,045 SHARES OF CLASS A COMMON STOCK, NO PAR VALUE, AS OF
                                  MAY 11, 1998

    Transitional Small Business Disclosure Format (check one);  Yes___  No _X_
Exhibit index on page 9                                       Page 1 of 12 pages

                                                              

<PAGE>








                         INDEPENDENT ACCOUNTANTS' REPORT

Board of Directors
Capital Reserve Corporation


The accompanying consolidated balance sheet of Capital Reserve Corporation as of
March 31, 1998,  and the related  consolidated  statements of operations for the
three  months  ended March 31,  1998,  and cash flows for the three months ended
March 31, 1998,  were not audited by us, and  accordingly,  we do not express an
opinion  on them.  The March 31,  1997,  consolidated  financial  statements  of
Capital  Reserve  Corporation  were compiled by other  accountants  whose report
dated April 24,  1997,  stated that they did not express an opinion or any other
form of assurance on those statements.

Consistent with the requirements of Item 310(b) of Regulation S-B management has
elected to omit  substantially  all of the  disclosures  required  by  generally
accepted accounting principles.  If the omitted disclosures were included in the
financial  statements,  they might  influence the user's  conclusions  about the
Company's  financial  position,  results  of  operations,  and its  cash  flows.
Accordingly,  these financial  statements are not designed for those who are not
informed about such matters.





/s/Bradeen, Campbell & Claar, CPA's
Bradeen, Campbell & Claar, CPA's











Denver, Colorado
May 2, 1998


                                        2

<PAGE>

<TABLE>

<CAPTION>
                           CAPITAL RESERVE CORPORATION
                           Consolidated Balance Sheet
                                 March 31, 1998

                                   (Unaudited)

<S>                                                                                           <C>
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                                                          $   3,624
   Accounts receivable                                                                                    5,258
   Marketable securities                                                                                 17,154
                                                                                              -----------------
     Total current assets                                                                                26,036

Investments                                                                                              11,166
                                                                                              -----------------

TOTAL ASSETS                                                                                           $ 37,202
                                                                                              =================


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Accounts payable and accrued liabilities                                                            $ 33,173
     Total current liabilities                                                                           33,173
                                                                                              -----------------

   STOCKHOLDERS' EQUITY
     Class A common stock                                                                             3,138,102
     Class B preferred stock                                                                             50,000
     Accumulated deficit                                                                            (3,184,073)
                                                                                              -----------------

                                                                                                          4,029
                                                                                              -----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                             $ 37,202
                                                                                              =================

</TABLE>


            See accountants' report and notes to financial statements




                                        3

<PAGE>

<TABLE>


                           CAPITAL RESERVE CORPORATION
                      Consolidated Statements of Operations

                                   (Unaudited)

<CAPTION>

                                                                                     Three Months Ended
                                                                                          March 31,
                                                                             -----------------------------------

                                                                                  1998                 1997
                                                                             ---------------     -----------------
<S>                                                                          <C>                 <C>
Revenues
   Insurance residuals                                                               $ 1,877               $ 4,036
   Consulting revenues                                                                     -                 2,500
   Interest and dividends                                                                 15                 1,247
   Investment (loss) gains                                                           (8,080)                79,856
   Loss on sale of assets                                                           (13,813)                     -
   Other                                                                              15,035                 9,950
                                                                             ---------------     -----------------

     Total revenues                                                                  (4,966)                97,589

Expenses
   General and administrative                                                         12,806               124,776
                                                                             ---------------     -----------------

Net (loss)                                                                        $ (17,772)            $ (27,187)
                                                                             ===============     =================

Net (loss) per common share                                                    $       (.03)         $       (.05)
                                                                             ===============     =================

</TABLE>

            See accountants' report and notes to financial statements


                                        4

<PAGE>

<TABLE>

                                       CAPITAL RESERVE CORPORATION
                                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               (Unaudited)

<CAPTION>

                                                                                  Three Months Ended
                                                                                       March 31,
                                                                        ---------------------------------------

                                                                               1998                   1997
                                                                        -------------------     -----------------

<S>                                                                     <C>                     <C>
Operations activities:
   Net loss                                                                      $ (17,772)            $ (27,187)
                                                                        -------------------     -----------------
   Reconciling adjustments:
     Depreciation and amortization                                                      964                 2,636
     Loss (gain) on investments                                                       8,080              (79,856)
     Loss on sale of assets                                                          13,813                     -
     Partnership (loss) income                                                            9               (9,144)
     Other                                                                          (4,654)                     -
Changes in assets and liabilities:
   Other current assets                                                                  93                 3,848
   Accounts payable and accrued liabilities                                        (15,839)             (104,858)
                                                                        -------------------     -----------------

     Total adjustments                                                                2,466             (187,374)
                                                                        -------------------     -----------------

Net cash used for operating activities                                             (15,306)             (214,561)
                                                                        -------------------     -----------------

Investing activities:
   Investments in common stock                                                      (1,893)              (38,674)
   Sales of investments in common stock                                               6,232               136,859
   Proceeds from sale of assets                                                       5,843                     -
   Purchase of property                                                                   -               (8,109)
                                                                        -------------------     -----------------

     Net cash provided by investing activities                                       10,182                90,076
                                                                        -------------------     -----------------

Net change in cash and cash equivalents                                             (5,124)             (124,485)
Cash and cash equivalents at beginning of period                                      8,748               229,375
                                                                        -------------------     -----------------

Cash and cash equivalents at end of period                                          $ 3,624             $ 104,890
                                                                        ===================     =================
</TABLE>

            See accountants' report and notes to financial statements


                                        5

<PAGE>



                           CAPITAL RESERVE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1998

                                   (Unaudited)

NOTE 1 - MANAGEMENT'S STATEMENT

In the opinion of management,  the accompanying unaudited consolidated financial
statements  contain all  adjustments  (all of which are normal and  recurring in
nature)  necessary to present fairly the financial  position of Capital  Reserve
Corporation  as of March 31, 1998,  and the results of operations  for the three
months ended March 31, 1998,  and 1997 and cash flows for the three months ended
March 31, 1998, and 1997. The Notes to Consolidated  Financial  Statements which
are  contained  in the  Form  10-K  should  be read in  conjunction  with  these
consolidated financial statements.

NOTE 2 - RELATED PARTY TRANSACTION

In March 1998, a corporation  which an officer of the  Corporation is affiliated
with  purchased the  Company's  insurance  residual for $15,000.  This amount is
included in other revenue in the accompanying financial statements. At March 31,
1998,  the Company had  received  $10,000 in cash and the  remaining  balance is
included in accounts receivable in the accompanying financial statements.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (ITEM 303)

LIQUIDITY AND CAPITAL RESOURCES

Working  capital at March 31,  1998,  was  ($7,137),  as compared to ($9,996) at
December  31,  1997.  Since the  Company has no  significant  source of revenue,
working capital will continue to be depleted by operating expenses. Furthermore,
if the Company should generate an operating loss for the current year comparable
to the loss incurred for the year ended December 31, 1997, a substantial portion
of the Company's remaining cash and working capital will be depleted.

Current  liabilities  were  $33,173 at March 31,  1998 as compared to $49,012 at
December 31, 1997.


                                        6

<PAGE>



RESULTS OF OPERATIONS

Due to the sale of the  Company's  rental  real  estate,  the  Company no longer
receives rental revenues. While the Company has continued to receive income (and
losses) from insurance residuals, interest and dividends, and investments, these
items are not a significant source of income compared to the Company's operating
expenses.

The Company had total  revenues  of  ($4,966)  and $97,589 for the three  months
ended  March  31,  1998 and  1997,  respectively.  As the  result of the sale of
marketable  securities,  for the three months ended March 31, 1998,  the Company
recorded an  investment  loss of $8,080,  as compared to an  investment  gain of
$79,856 for the same  period  during  1997.  The Company  also  generated  other
revenues of $15,035 for the three months ended March 31, 1998, which was largely
due to the sale of the  Company's  insurance  residual to a related  party.  See
"Item 1. Financial Statements - Note 2." During the three months ended March 31,
1998,  the Company  incurred a loss on the sale of assets,  attributable  to the
sale of the  Company's  furniture  and  fixtures to an unrelated  party,  in the
amount of $13,813. See "Item 1. Financial Statements."

General and  administrative  expenses for the three months ended March 31, 1998,
include legal expenses of $1,990.

General and  administrative  expenses for the three months ended March 31, 1998,
also include: (i) rent expenses of $2,806; (ii) accounting and auditing expenses
of  $5,250,  entertainment  and  development  expenses  of $697,  and  insurance
expenses of $658.

As compared to the three months ended March 31, 1997, operating expenses for the
current period decreased by 90%. The net loss from continuing operations for the
three months ended March 31, 1998, decreased by 35%, generally attributable to a
decrease in expenses and total revenues.


                           PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS (ITEM 103)

                  Not Applicable.

ITEM 2.           CHANGES IN SECURITIES

                  Not Applicable


                                        7

<PAGE>



ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

                  Not Applicable

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not Applicable

ITEM 5.           OTHER INFORMATION

                  Not Applicable.


                                        8

<PAGE>



ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K (ITEM 601)
<TABLE>
                  A)       EXHIBITS
<CAPTION>

            REGULATION S-B                                                                  CONSECUTIVE
                NUMBER                      EXHIBIT                                         PAGE NUMBER
                   <S>     <C>                                                                   <C>
                   2       Plan of purchase, sale, reorganization
                           arrangement, liquidation, succession                                  N/A
                  3(i)     Articles of Incorporation as Amended(1)<F1>                           N/A
                  3(ii)    Bylaws as Amended(2)<F2>                                              N/A
                   4       Instruments defining the rights of security
                           holders, including indentures                                         N/A
                  10.1     Settlement Agreement(3)<F3>                                           N/A
                  10.2     Sub-Contracting Agreement with Columbia
                           Financial Group(6)<F6>                                                N/A
                  11       Statement re computation of per share earnings(4)<F4>                 N/A
                  15       Letter on unaudited financial information(5)<F5>                      N/A
                  16.1     Letter from John M. Hanson  & Company, P.C.
                           regarding change in certifying accountants(6)<F6>                     N/A
                  18       Letter on change in accounting principles                             N/A
                  19       Report furnished to security holders                                  N/A
                  22       Published report regarding matters submitted
                           to vote of security holders                                           N/A
                  23       Consents of experts and counsel                                       N/A
                  24       Power of Attorney                                                     N/A
                  27       Financial Data Schedule                                                12

--------------------------------
<FN>
<F1>
(1)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Company's Annual Report on Form 10-K for the fiscal year ended December
         31, 1990.
<F2>
(2)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Company's  Annual  Report on Form  10-KSB  for the  fiscal  year  ended
         December 31, 1994.
<F3>
(3)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Company's Annual Report on Form 10-KSB/A Amendment No. 1 for the fiscal
         year ended December 31, 1996.
<F4>
(4)      See Part I - Financial Statements.
<F5>
(5)      See Part I - Financial Statements.
<F6>
(6)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Company's  Quarterly  Report  on  Form  10-QSB  for  the  period  ended
         September 30, 1997.
</FN>
</TABLE>
         B)       REPORTS ON FORM 8-K:  None

                                                    9

<PAGE>



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                  CAPITAL RESERVE CORPORATION
                                  (Registrant)

Date:    MAY      , 1998          By: /S/RALPH W. NEWTON, JR.
         ---------------              -----------------------
                                  Ralph W. Newton, Jr.
                                  Principal Financial and Accounting
                                  Officer and President

33198.10Q

                                       10

<PAGE>


                                   Exhibit 27

                             Financial Data Schedule











                                       11

<PAGE>